MLT, Redstone Building reach tentative agreement to extend city hall lease

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City of MLT logoThe City of Mountlake Terrace and the owners of the Redstone II Building, 6100-219th St.S.W., have reached a tentative agreement to extend the city’s lease of second floor office space in the building through June 2019. The agreement is expected to be approved by the Mountlake Terrace City Council next month.

The agreement calls for the city to continue leasing 16,821 square feet of office space starting at $18.50/square foot for months four through 12 of the lease, then at an accelerating rate for each 12-month period through the five-year extension. The city would pay no rent for the first three months of the agreement. The city currently pays $20.66/per square foot in base rent for the same office space.

The tentative lease also calls the city to continue paying its share of the Redstone II Building utility and tax costs, set at 14.2024 percent of the total annual utility and tax costs of the building. This year the “additional rent” will total approximately $129,000.

The tentative agreement was discussed by the city council at its work/study session on Nov. 25.

The city originally entered a five-year lease agreement with the owners of the Redstone Building in 2009 after former City Hall at 232nd Street Southwest and 58th Avenue West became inhabitable due to a ceiling collapse in July 2008. The lease included a three-year extension clause that the city and current owners of the Redstone Building have agreed to lengthen to five years.

“We identified to them (Redstone Building owners) that we would likely need longer than three years for us to get a new city hall approved by voters, the design completed, and it constructed; we would need five years,” said City of Mountlake Terrace Interim City Manager Scott Hugill.

City officials considered other options before reaching a tentative agreement with owners of the Redstone II building. The city looked at 14,770 square feet of space in the Hall Creek Office Park, 6912-220th St. SW, and 11,000 square feet of space in the Pacific Cascade Building, 21905-64th Ave. W. The Hall Creek location was rejected due to lack of parking and street visibility; the city wasn’t comfortable with the $21/square foot cost of space at the Pacific Cascade Building.

City officials also discussed purchasing an existing building for use as a City Hall, but the idea was quickly rejected since the city has no general government funds identified for building purchases, and there was no support for removing a privately-owned property from the property tax roll.

Without their own building to occupy, city officials expressed that options are limited in finding space to conduct city administrative operations. “If we were another private entity, we could look at a broader region, but we have to operate within Mountlake Terrace, and so our marketplace is limited,” Hugill explained. “We can’t rent outside of Mountlake Terrace.”

City officials feel they are getting the best deal available to them at this time, Hugill said. “We checked with a couple of outside consultants, brokers, on this, and they thought it was a sound business deal in this economy,” Hugill added.

“It would be a lot better to be in our own home, on our own dirt, and I hope someday that we do get to that,” said Mayor Pro Tem Laura Sonmore. “(But) at this point it makes more sense to stay where we are at, because the cost of moving, the destruction to the work, and looking at the costs, the point breaks, of those other buildings, it doesn’t make sense to actually get up and move.”

City of Mountlake Terrace tentative lease: base rent of Redstone II Building office space (July 2014 – June 2019)
First three months, Year 1    $ 0                         Total of $0
Months four-twelve, Year 1  $18.50/square feet Total of $233,391.38
Entirety of Year 2                 $18.90/square feet Total of $317,916.90
Entirety of Year 3                 $19.40/square feet Total of $326.327.40
Entirety of Year 4                 $20.00/square feet Total of $336,420.00
Entirety of Year 5                 $20.70/square feet Total of $348.194

— By Doug Petrowski

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